Feb. 25 (Bloomberg) -- Apple Computer Inc. will return to London's High Court today to contest the latest lawsuit brought by a company owned by the Beatles over the personal-computer maker's use of the Apple trademark.

Apple Corps Ltd., owned by the four Beatles or their families, says the Californian company's iTunes online music store breaches a 1991 agreement forbidding the computer maker from using the trademark for any works ``whose principal content is music and, or performances.'' Apple Computer would retain the logo for its ``core business,'' court documents said.

``Providing both businesses stay within their particular areas, then trademark law allows them to coexist,'' said John Linneker, a partner in intellectual property at London law firm Taylor Wessing. ``It's when computers meet the music industry that the trademark conflict blows up.''

The iTunes product allows people to download songs from the Web for 99 cents each and transfer them to Apple Computer's iPod music players. Chief Executive Steve Jobs is betting on digital music devices to help drive sales as the company's share of the computer market wanes.

The Beatles' lawyers will argue in a two to three day hearing that the case should be heard in London. The computer maker's lawyers contest this and have asked a Californian judge for the case to proceed in San Jose.

Original Agreement

The two companies' original agreement on the Apple trademark, signed in 1981, allowed the Californian company to use the name only for the sale of computers. Apple Computer later used the logo for computers to edit and record music, prompting the Beatles' company to file a lawsuit in 1989. The companies settled their dispute in 1991 and signed a new agreement after a trial lasting more than 100 days at the High Court.

That contract stipulated Apple Computer could use the logo for computers, data processing and telecommunications, while the Beatles could retain it for music, according to documents filed by the pop group's lawyers at the High Court.

Apple Corps, run by Neil Aspinall in London, is owned by Sir Paul McCartney, Ringo Starr, and the widows of John Lennon and George Harrison. It tries to control the use of the Beatles' image and work by issuing licenses and retaining final approval on any products. The Apple record label released the White Album and Hey Jude in 1968.

Apple Computer was founded by Jobs and Steve Wozniak in 1976 in Jobs' garage. The men, both college dropouts, sold their first machine without a monitor, keyboard or casing.

Market Share

Apple's share of the computer market last year slipped to 2.9 percent from 3.3 percent a year earlier, according to research group Gartner Inc. The iTunes software, in contrast, accounted for 70 percent of legal music downloads last year, Jobs has said. The iPod device accounted for a fifth of all digital music players sold in December, according to figures from the NPD Group released earlier this month. The iTunes music purchasing service isn't yet available to U.K. users.

The recording industry is looking to paid services like iTunes to counter music piracy over the Internet. ITunes is the most popular of the so-called legitimate services that compete with free swapping Web services such as Kazaa.

Lord Grabiner QC and Daniel Toledano are acting for Apple Computer, while Geoffrey Vos QC and Daniel Alexander QC are representing the Beatles.

The London case is Apple Corps Ltd. V Apple Computer Inc. HC2003C02428. The case in San Jose is Apple Computer Inc. v Apple Corps, C03 04560 RMW, in the U.S. District Court, Northern District of California.

Law firm Greenberg Glusker Fields Claman Machtinger & Kinsella LLP are acting for Apple Corps in the U.S. O'Melveny & Myers LLP are representing Apple Computer.

Timeline:

1963 June 20 - The Beatles Ltd. is set up to represent the group's
interests.

1967 Dec. 4 - The Beatles Ltd. becomes Apple Music Ltd. and is
later renamed the following year as Apple Corps Ltd. It begins
using the apple logo as a trademark.

1981 Apple Corps signs agreement with Apple Computer over the use
of the word Apple and the apple logo as a trademark. The agreement
settles conflicts in the 1970s over Apple Computer's use of the
`Apple' and the logo of an apple.

Late 1980s - Disputes arise between Apple Computer and Apple Corps
over the 1981 agreement.

1989 Apple Corps files its first suit against Apple Computer,
claiming the 1981 agreement has been breached.

1991 Oct. 9 - After more than 100 days of trial in London, Apple
Corps and Apple Computer reach a settlement. Apple Computer pays
Apple Corps $26.5 million. A trademark agreement is also signed,
replacing the 1981 and 1986 contracts.

2003 July 4 - Apple Corps sues Apple Computer at the High Court in
London. Oct. 8 - Apple Computer files its suit in San Jose,
seeking a declaration from Apple Corps that the agreement has not
been breached.

To contact the reporter on this story: Liz Chong at lchong4@bloomberg.net

Last Updated: February 25, 2004 02:43 EST